Offshore Receipts in respect of Intangible Property - CIOT response

19 Jul 2019

Making Tax Digital for business

Latest stats:

>650k businesses have signed up for MTD [note ‚ mandated population is around 1.2m businesses].

>28k Agent Services Accounts have been set up.

>400k successful VAT return submissions through MTD.

Recent developments (already reported here) in relation to the Agent Services Account have included:

You are now able to track the status of authorisation requests made in the last 30 days ‚ this is where an agent has used the new digital authorisation route from ASA to authorise a new client.

In response to user feedback the ‚ link your clients‚ step has been renamed to ‚ copy your clients‚ . HMRC have provided a revised ASA step by step guide that reflects this change.

HMRC have delivered new functionality that shows agents the number of client authorisations that they have copied over from HMRC online services.

HMRC are working on development of a ‚ task list‚ within the ASA, to show which parts of the process have been completed ‚ more to follow later.

HMRC are also looking to gather issues together in one place around service availability‚ again more to follow later.

Recent HMRC communications have included:

Nudge emails to businesses on stagger 1.

Letter to monthly filers who have not yet signed up to MTD (light tone, but unless deferred they should have filed two returns under MTD by now).

Comms re: sign up windows. Businesses that pay by DD should wait until their last non MTD payment has been collected to sign up or be signed up by an agent.

Overseas agents ‚ HMRC are refining the process. UK agents must meet Anti-Money Laundering requirements, and overseas agents need to meet any equivalent obligations in their country. The overseas agent ASA journey is to be changed so that it includes a declaration that the agent is AML registered, or doesn‚ t need to be. We met with HMRC last week to discuss this area.

Overseas businesses ‚ some overseas businesses are not recognised as such, meaning that they cannot sign up to MTD (again already reported here). HMRC are putting a fix in place by 1 October ‚ the date that overseas businesses are mandated into MTD.

Guidance review

HMRC explained that a team was formed in March 2017 to look at guidance, and in October 2017 was commissioned to do a report on their 290 manuals (some 80,000 pages, ‚ owned‚ by 150 to 200 manual owners). The team consulted the internal manual owners, spoke to staff and users etc to get a comprehensive understanding of use and feedback.

The OTS report into guidance also made a number of recommendations in relation to HMRC manuals.

Feedback on the content of the manuals was positive, but the negative feedback revolved around issues such as navigating and searching the manuals, some content being out of date etc.

HMRC are piloting integration of the VAT manuals and Public Notices as there is significant duplication, and feedback is that the Public Notices are preferred by users.

It was also noted that feedback from the GOV.UK pages had gone to the Government Digital Service (GDS), but had not reached the manual owners ‚ 90% of that feedback received since October 2018 has now been actioned. HMRC are also looking at a feedback process which may allow the comments to be tracked.

Guidance is now largely centralised within HMRC, rather than being dispersed as previously.

VAT up-front honesty declaration trial

The VAT up-front honesty declaration trial is part of a wider programme looking at digital prompts.

The trial commenced in early September 2018 and applied to a random 50% of the trader population (the ‚ test group‚ ); the other 50% did not see the additional prompts (the ‚ control group‚ ). This part of the trial has just finished.

The impact of the prompts on the test group was significant. Returns filed where the prompt was seen for the first time resulted in additional £235m in VAT payable, compared to the control group. The second time the prompt was seen (ie the subsequent return) resulted in an additional £95m of VAT payable, but by the third and fourth times this additional tax effect had disappeared. So, whilst the prompt had a significant initial impact, that impact lessened as people got used to seeing it.

HMRC have now introduced the prompt for the control group ‚ ie those businesses who haven‚ t been exposed to the prompts so far, but will stop showing the prompts to the test group. Again, HMRC will then analyse the results.

HMRC are evaluating these results along the other trials they are doing, such as considering the proximity of the prompt to the time at when figures are input / submitted by the businesses, visibility / fonts / colours etc. The closer the prompt is to the point that data is entered, the more effect it seems to have.

For VAT, it was recognised that this prompt will have a diminishing impact as businesses move to MTD and so cannot easily be presented with these additional prompts by HMRC ‚ but this is something actively being considered by HMRC.

Customs Declaration Service Webinar

HMRC shared a draft Talking Points presentation around the new Customs Declaration Service, and asked for comments. Some limited feedback was provided but it was apparent that HMRC had already consulted widely with stakeholders about its content.

The latest Digital Services Update from HMRC can be found here.